Lockheed Martin Wins $6 Billion Netherlands Contract

Today, the Dutch government announced its decision to select Lockheed Martin's (NYSE: LMT) F-35 as the official replacement for the F-16. The financing of the replacement will be carried out with the investment budget of 4.5 billion euros and the current F-16 operating budget of 270 million euros, for a total of approximately $6.4 billion.

It is expected that this will allow them to purchase 37 F-35s, which are anticipated to begin their introduction in 2019. The last F-16 is expected to be decommissioned in the mid-2020s. The final costs of the F-35 have not been determined and the Netherlands has reserved 10% of the investment budget, which "can be used to meet any unforeseen rise in the estimated costs, without any direct consequences for the number of aircraft."

The Netherlands is the seventh country to purchase operational aircraft from Lockheed Martin in addition to the three U.S. military services.

For more than 30 years, Netherlands has both owned and operated Lockheed Martin aircraft. Laurie Quincy, a Lockheed Martin spokeswoman, noted: "Flying the F-35 will represent the next chapter of our partnering by providing the very best aircraft capabilities possible for Netherlands' national security. This decision confirms the value of acquiring a transformational 5th Generation fighter capability, and is testimony to the Netherlands confidence in the program."

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